Secured loan rates
If a loan is `secured`, it means that the loan is secured against your home. That means that if you can no longer afford your loan payments, the lender can repossess your home (although this is generally a last resort).
So long as you can be sure that you can keep up on your repayments for the duration of the loan term, a secured loan can be a convenient source of funds that can offer lower interest rates and a longer repayment period compared with unsecured loans.
How are secured loan rates decided?
As with any loan, the interest rate you are offered will largely depend on your credit history and your current circumstances (such as your regular income and your existing debts).
Every time you use credit - whether it`s an overdraft, a credit card or a personal loan - a record will be made on your credit history. Future lenders can then use this history to assess your reliability as a borrower and give you a credit rating.
If you`ve used credit within the pre-agreed limits, this will go down as a positive towards your credit rating; equally, if you have exceeded your limits (for example, exceeding your overdraft limit or missing loan repayments), then this could harm your credit rating.
That said, if your credit rating is poor, that doesn`t necessarily mean you won`t be able to find a loan. Different lenders have different criteria for their lending, any there are a number of lenders who focus specifically on loans for people with a less-than-perfect credit history. The only real difference is that your interest rate is likely to be higher than someone with a good credit rating.
However, lenders typically view secured loans as a lower risk than unsecured loans, and as such you could be offered a reasonable rate even if your credit history is poor.
For more information on a range of loans, click here or call one of our expert loans advisers on 0800 195 2910.